According to a survey conducted by GKI Economic Research Co., supported by the EU, both consumers and businesses expressed greater optimism in August than in July. The composite indicator of expectations, the GKI Confidence Index, rose by just over two points. Companies’ willingness to hire strengthened noticeably. Expectations regarding future sales prices remained unchanged compared with the previous month. The overall business environment also became slightly more predictable.

Following a two-point drop in July, the GKI Business Confidence Index rose by two points in August, returning to its June level. All four sectors reported more favourable assessments, with sectoral confidence indices showing increases of varying degrees compared with July. The construction industry remained the least optimistic, while business services remained the most upbeat.

The employment indicator, which reflects companies’ aggregate staffing expectations, had been declining steadily for more than a year. This negative trend came to a halt in August, as companies’ overall outlook showed slightly greater optimism than in July. Over the next three months, 7% of firms expect to increase headcount, while 12% anticipate a reduction. Industry and services were the two most optimistic sectors.

Perceptions of predictability in the business environment also improved modestly, reaching a five-month high. Industrial firms continued to suffer most from a lack of predictability, while business service providers reported the fewest concerns.

After months of steady decline, the price indicator stabilised in July, and August brought no significant change. Over the next three months, 17% of firms plan to raise prices, while 7% expect to cut them. For consumers, the good news is that in retail trade, the intention to increase prices has fallen to a fifteen-month low.

The GKI Consumer Confidence Index rose by just over two points in August compared with July, also reaching a four-month peak. All components of the index improved. Households judged their financial situation over the past twelve months to have improved noticeably, and their expectations for the coming twelve months to have improved slightly. They also anticipated a more favourable outlook for the country’s economy than in July. Assessments of households’ ability to spend on major consumer durables also improved. Inflation expectations among households edged up, while fears of unemployment declined compared with the seventh month of the year.

The data presented in the charts can be found in the accompanying Excel file.

Methodological Explanation:

GKI Economic Research Co., following the methodology prescribed by the European Commission, calculates its economic sentiment index by integrating expectations from both the business sector and households (consumers). Specifically, the GKI economic sentiment index is a weighted average of the consumer confidence index and the business confidence index.

The GKI business confidence index itself is a weighted average of confidence indicators from four sectors: industry, retail trade, construction, and services. The employment indicator reflects the net balance of firms planning to increase or decrease their workforce over the next three months. Similarly, the price indicator measures the net difference between companies intending to raise or lower their selling prices within the same period.

The GKI consumer confidence index is computed as the arithmetic mean of balance indicators derived from survey responses regarding households’ assessments of their financial situation over the past twelve months, their financial outlook for the next twelve months, expectations for the country’s economic performance, and intentions to purchase durable goods.

GKI publishes seasonally adjusted data, employing appropriate mathematical techniques to eliminate distortions caused by seasonal factors – such as heightened demand before Christmas or reduced production during summer holidays.